North America
In the U.S.:
- This comes as states grapple with how to implement President Trump’s executive orders to provide coronavirus relief of roughly $400, after $100 investment by the state.
- The stronger data may weigh on stimulus negotiations going forward, as there maybe less appetite for a large deal.
REIT Focus:
Shares of Vornado Realty Trust (VNO) rallied on Tuesday following the announcement that Facebook was leasing all the office space in the Farley Building, a former post office on Manhattan’s West Side that the company is redeveloping. The news was welcomed in a sector that has been hit particularly hard during the pandemic.
In China:
- The strong export reading reflected the re-opening of overseas economies from coronavirus restrictions.
- The reading marked the third straight month of expansion. Commentary was generally positive, noting that growth rates of new business and activity remained strong although Covid-19 related risks still lingered.
In Japan:
- Prime Minister Shinzo Abe stated that he does not plan to declare a state of emergency and urged people to take precautions to help protect the elderly.
REIT Focus:
CK Asset Holdings Ltd. announced that it was cutting their dividend by 35%. The cut is a direct response to CK Assets falling profits due to the coronavirus. Some analysts believe that the dividend cut will continue through the rest of this year.
Europe
In Europe:
- The uptick in case growth comes as a slew of companies across the bloc this week have announced jobs cuts
- The blast had killed at least 150 and has displaced over 300,000 people from their homes. Public anger, aimed at the government, has led to massive protests.
REIT Focus:
SEGRO Plc, the largest listed REIT with a Europe only focus, reported its 1H20 results this week with EPRA EPS of 12.5 pence/sh, a 2.5% YOY increase vs 1H19. Like-for-like rental growth was +2.0% (+2.9% in the UK and +0.5% in Continental Europe), excluding provisions for potential bad debts of £3.0 mn against rent billed but not yet paid. Portfolio vacancy remains low at 5.2% versus 4.0% at 12/31/19 with the increase mainly due to recently completed development projects that remain in lease-up. Customer retention remains high at 88%. CEO David Sleath commented in the earnings release that the pandemic has accelerated some of the structural trends that support further logistics demand. SEGRO raised £680 mn of new equity during the period and €450 mn of new debt subsequent to period end to support its growth. SEGRO’s loan-to-value at 6/30/20 was at 22% providing significant financial flexibility. The interim divided was increased by 9.5% to 6.9 pence/sh. SEGRO also established the £10 mn SEGRO Centenary Fund during the period to help provide support to those affected by the COVID-19 pandemic. SEGRO has been the best performing UK listed REIT year-to-date.
The views expressed in this update are as of the date of this blog entry. These views and any portfolio holdings discussed in the update are subject to change at any time based on market or other conditions. The adviser disclaims any duty to update these views, which may not be relied upon as investment advice. In addition, references to specific companies’ securities should not be regarded as investment recommendations or indicative of the Adelante products, strategies, or portfolios.